Consideration and promissory estoppel simple notes PDF

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Consideration and promissory estoppel simple notesConsideration  Give something in exchange for the promise made by othersDefinition16 th century: an idea of “reciprocity” classical: “detriments and benefits”  (Thomas v Thomas ($1 a year for the house))  mere benefit is enough (Currie v Misa) Mod...

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Consideration and promissory estoppel simple notes Consideration  Give something in exchange for the promise made by others Definition 16th century: an idea of “reciprocity” classical: “detriments and benefits”  (Thomas v Thomas ($1 a year for the house))  mere benefit is enough (Currie v Misa) Modern approach: practical benefit (Williams) + promise for promise Rule 1: past consideration is not a good consideration Re McArdle: the stupid person did a lot of good work to improve the house. Family member claimed that they would pay her for the good work done.  Cannot claim because the work was done before the promise was made Exception (Pao On v Lau Yiu Long) 1) At the request of promisor 2) Promisee relied on it 3) The sum was legally enforceable Lampleigh case (do witness for the promisor, promisor said will pay him)  Good consideration as it was at the request of promisor Rule 2: must move from promisee (not necessarily move to promisor) Privity rule – bars a third party from suing on a contract made for his benefit Contracts (right of third parties) Act 1999 – I) Third parties can enforce the contract if it is expressly authorized to do so II) Can be done without consideration Rule 3: sufficient not adequate

Chappell & Co Ltd v Nestle Co Ltd - Small amount of money + chocolate wrappers Sentimental motives cannot be consideration (White v Bluett) Rescission: don’t need consideration (both parties give up rights), unless: One party has outstanding rights (then must provide consideration) Variation of contract: - if they vary to offer (legal+factual) benefits to each other, generate own consideration - if wholly for benefit of one, need consideration Duty imposed by law: would not generate consideration unless did more than exceeding duty  police did more than obligating to do (Glasbrook Bros Ltd)  make the child happy + healthy -> happy (more than obligation) -> (ward v byham) Duty imposed by contract with promisor: Scenario 1: Pay more Tradition: Stilk v Myrick -> no consideration from what they are originally bound to perform Harris v Watson -> carry more than originally bound to because a few of them died and the remaining did more work for extra pay Modern: Stilk + Harris were relaxed in Williams. Issue: whether a promise to pay extra sum for P to finish the renovation work on time constituted valid consideration - practical benefit (avoid breach of main contract) can be sufficient consideration for a contract (or variation of contract) Scenario 2: Pay less

General rule: part payment as a full satisfaction of payment cannot be good consideration (D & C Builder) (Pinnel case) (In re Selectmove) Pinnel case: something other than lesser sum – good consideration / payment in advance is good consideration MWB: Facts: licensee got financial problem can can’t pay on time. They claimed that that can pay after xmas, and licensor promised i) charge lower now and ii) charge higher rent later Held: fresh consideration Due to pay in different manner + higher recover and continued occupation) ^distinguished from Foakes v Beer: continued occupation cant be consideration how to reconcile MWB and Williams: Williams – supply of service or goods MWB – debts (can choose to use which) Promissory estoppel: Discussed in Hughes v Metropolitan highway (renovate the house roof for 6 months)  Denning: inequitable if person enforced his strict right when the others believed he would not do so Established in High tree (2nd world war rent house)  Party should be prevented going back to promise to waive certain rights as long as the promisee relied upon Rule 1: clear promise Rule 2: relied on (e.g. hughes -> relied on low rent + start to pay low rent) Rule 3: inequitable Rule 4: suspensory right (e.g. hughes -> suspend the right to obtain higher rent temporarily, resume after the war) Rule 5: shield not sword (controversial) UK case: Baird Textiles Ltd v Marks and spencer (stop ordering clothes) -> cannot use as cause of action Combe v Combe (cause of action must be provided with consideration) AUS case: Walton Stores (Interstate) Ltd v Maher (demolish the building -> half done)  Estoppel function: avoid detriment the promisee would suffer  Can have rights to action

 No need pre-existing legal relationships Distinguish: Whether have pre-existing legal relations If yes, UK -> if no, AUS. Mindy: Pros and cons for enforcement: Pros -recognize performance actually bargained for when there is some technical obstacle to its qualifying consideration (‘nominal’ / practical benefit as in Chappel + Williams) -respect party’s intention (nominal consideration) -protect the promisee’s reliance (forbearance to sue) -impose responsibility otherwise regarded as just (Ward)

Cons -gifts in private domain -> law’s involvement may do more harm (e.g. invalidity of intangible benefits) -potentially extorted promises

2 limits of nominal consideration: i) Unenforceable if the consideration is less than promise sought to be enforced (pay you 500 for 1000). However, if specific money (special date / currency / earlier time -> enforceable) ii) Mm get Illusory consideration-> not consideration (really get nothing which is ok) Illusory when: i) Impossibility -> promisee’s performance is impossible ii) Discretionary promise: promise to do sth if feeling the time comes iii) Un-unduced performance by promisee Forbearance to sue: Where X has a claim against Y, X provides consideration for Y’s promise if X  Forbears from suing (Not to enforce it for specified time)  Compromises his claim (abandon his claim)  Unless he knows his claim is invalid (unless good faith) Pre-existing duties owed to a third party -> good consideration  My promise is enforceable if you perform your duty to a third party. (Shadwell v Shadwell) Pre-existing duties owed to other party -> not good consideration (overturned by Williams)

(the same for more)  No consideration (Stilk v Myrick) (duress / existing duty?) It is enforceable if:  Give something ‘more’ than obliged to do (Harley)  Agreed to end existing contract and make a new one on different terms Williams: (enlarged the scope include practical benefits + doctrine of duress) 4 benefits: i) continued performance, ii) avoid trouble for substitute, iii) avoid penalty, iv)perform in more orderly manner. First 3 actually hai obliged to do (mindy) “Consideration: practical benefit and the emperor’s new clothes” -> this undermines the function of consideration -> as it is merely “re-promise” of existing duty (less for same) Foakes v Beer + Pinnel: part payment as full satisfaction not good consideration Exception: gave something additional / promise made to third party Re Selectmove – even if it confers practical benefit, not valid consideration Promissory estoppel Reliance can be satisfied when i) Part-payment of the debt ii) Reliance makes it inequitable to resile from promise iii) Effect is extinguishing the right Only applies where there is pre-existing contractual relationship, and one party promises to give up some of his rights. It can enforce promises of ‘same for less’, not ‘more for the same’ (already have consideration) and no new rights. Three reasons to support that promissory estoppel can create new causes of action: 1) Other estoppels create cause of action (estoppel by convention + proprietary estoppel) 2) Promissory estoppel and consideration rest on different bases (Maher)  There is no clash if we recognize they rest on different bases (since avoid cause of action is to avoid direct clash with requirement of consideration)  Consideration yields a contractual cause of action for the enforcement of the promisee’s full expectation  Promissory estoppel seeks to avoid detriment arising from promisee’s reliance on the promise, if it would be inequitable for the promisor to renege Should not be a sword (“the offensive limits of promissory estoppel”) i) Uncertainty and conflict with contractual actions ii) In fact consideration and promissory estoppel have common propose

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Promissory estoppel has been developed particularly in the context of contract modifications, and this expertise and experience will be wasted if promissory estoppel is merged in a wider doctrine of estoppel...